Asia Cement (China) (0743.HK)'s medium-term net profit fell 57% from the same period last year to RMB 140 million, accounting for only 25% of Thomson Reuters' full-year profit forecast. According to Citi, falling prices in the Sichuan market and rising coal costs are the reasons why cement profits in Asia have declined and profit margins have declined. Citigroup added that the Sichuan government's cancellation of electricity price discounts has also hurt profit margins. The bank said that the declining factors of cement prices in Sichuan have been digested, but cement prices have not yet bottomed out; the stock's loss indicates that the market has anticipated that conditions in the Sichuan market will deteriorate, but new production capacity will still enter the market from 2010 to 2011; therefore, cement prices will fall further. Citi maintains its selling rating for the stock; it may later adjust the company's profit expectations and target price (HK$3.91). The stock closed down 0.3% to HK$3.73 yesterday.